{"id":44826,"date":"2019-03-27T12:13:04","date_gmt":"2019-03-27T17:13:04","guid":{"rendered":"https:\/\/olduvai.ca\/?p=44826"},"modified":"2019-03-27T12:13:10","modified_gmt":"2019-03-27T17:13:10","slug":"janet-yellen-suggests-strengthening-the-fed-put","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=44826","title":{"rendered":"Janet Yellen Suggests Strengthening The \u2018Fed Put\u2019"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/realinvestmentadvice.com\/janet-yellen-suggests-strengthening-the-fed-put\/\">Janet Yellen Suggests Strengthening The \u2018Fed Put\u2019<\/a><\/h3>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/realinvestmentadvice.com\/wp-content\/uploads\/2019\/03\/Yellen.png\" alt=\"\" class=\"wp-image-414924\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">In a speech in Hong Kong this week, former Fed chair Janet Yellen stated that&nbsp;<strong>\u201cglobal central banks don\u2019t have adequate crisis tools.\u201d<\/strong>&nbsp;According to that logic, she believes that launching additional multi-trillion dollar rounds of quantitative easing and cutting interest rates into negative territory \u2013 two aggressive and controversial monetary tools that are currently available \u2013 are simply not enough. Yellen\u2019s comments this week echo comments that&nbsp;<a href=\"https:\/\/www.reuters.com\/article\/us-usa-fed-yellen-purchases-idUSKCN11Z2WI\">she made<\/a>&nbsp;in September 2016 when she was still Fed chair:&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong>The Federal Reserve might be able to help the U.S. economy in a future downturn if it could buy stocks and corporate bonds, Fed Chair Janet Yellen said on Thursday.&nbsp;<\/strong><\/p><p>Speaking via video conference with bankers in Kansas City, Yellen said the issue was not a pressing one right now and pointed out the U.S. central bank is currently barred by law from buying corporate assets.&nbsp;<\/p><p>But the Fed\u2019s current toolkit might be insufficient in a downturn if it were to \u201creach the limits in terms of purchasing safe assets like longer-term government bonds.\u201d<\/p><p>\u201cIt could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions,\u201d she said, adding that buying equities and corporate bonds could have costs and benefits.<\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">If the Federal Reserve is ever allowed to buy stocks and corporate bonds, it will create an extremely dangerous situation in which investors, speculators, and business leaders will feel that they can take virtually unlimited risk and will still be backed by the Fed. This phenomenon is known as a\u00a0<em>moral hazard<\/em>\u00a0or<em>\u00a0<\/em>the<em>\u00a0Fed Put<\/em>. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Janet Yellen Suggests Strengthening The \u2018Fed Put\u2019 In a speech in Hong Kong this week, former Fed chair Janet Yellen stated that&nbsp;\u201cglobal central banks don\u2019t have adequate crisis tools.\u201d&nbsp;According to that logic, she believes that launching additional multi-trillion dollar rounds of quantitative easing and cutting interest rates into negative territory \u2013 two aggressive and controversial [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1806,303,451,24838,24840],"class_list":["post-44826","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bubble","tag-fed","tag-janet-yellen","tag-jesse-columbo","tag-stock-buying"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=44826"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44826\/revisions"}],"predecessor-version":[{"id":44827,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44826\/revisions\/44827"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=44826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=44826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=44826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}